Bloomberg Audio Studios, podcasts, radio news. Micro Strategy still buying bitcoin amid the tokens record run. It's bought the digital currency for six straight weeks, bringing its total haul to forty five billion dollars. That's all before micro Strategy joins the Nasdaq one hundred index next week. Now, the company's share price is outperforming bitcoin itself this year, as retail traders and hedge funds pile in and capitalize on the volatility.
I'm pleased to say that we're joined now by MicroStrategy co founder and executive chairman Michael Sailor, And of course we're going to get to the bitcoin purchases, but I actually want to start with the politics of it all, because you've been relatively less vocal than some of your peers in the crypto community about your political views, and I have to ask, have you met with President elect Donald Trump.
I've met with a lot of people in the incoming administration, but I couldn't comment further than that.
Okay, I can't comment further than that. I was going to ask you about plans, but instead I'll ask you about whether or not you would be willing to serve in the Trump administration in any capacity. Bloomberg has reported that there potentially could be a crypto advisory council. Is that something that you might be interested in?
You know, I'm always willing to provide, you know, thoughts on constructive digital assets policy, either in confidence or publicly, and if I'm asked to serve on some sort of digital assets advisory counseling, probably would do so.
Yes, Michael, I also want to talk to you about micro strategy, your own plans. It's amazing you have announced plans to raise forty two billion dollars over three years. You announced that back in October. But the rate you're going at, and this is through convertable debt offerings as stock sales, the rate you're going at, you could fulfill that target by January. Are you planning to lift that cap and line up more facilities in the pursuit of more bitcoin.
Yeah. When we announced that, it wasn't clear how enthusiastic the capital markets would be, but we got a very enthusiastic reception. And then after November fifth, with the Red Wave, we saw a big sea change in the political environment, and so we went faster than we had thought we were going to go on October thirtieth. Our goal is to is to continue to raise capital primarily through fixed
income markets. So we'll pursue preferred stock or convertible bond or other equity linked financings as long as it's creative for our shareholders. When we get through the twenty twenty one plan, which is forty two billion in capital, we'll revisit, revisit our capital plan, and we'll put in place a new plan, subject to market conditions at the time.
All right, So we'll look forward to that. I am curious, you know, with what you've raised so far. It seems like you've been tapping the market facility more so than converts in order to raise cash, and I'm wondering if there's anything to read into that.
Well, just the equity capital markets were very enthusiastic over the past four weeks, and so we're always considering, is that the convertible market, is it the fixed income market? Is it the equity market we want to go to? And that's going to change from time to time. I expect that that MAX will shift more heavily toward fixed income markets in Q one as we go forward, because right now we're probably getting a little bit too de levered,
and we'd like to actually get more leverage. We have about seven point two billion dollars of converts, but four billion of the mariority essentially equity. They're through the strike price, they're through the call price, and they're trading with a delta approximately one hundred percent, So they're looking like equity, and so we would like to go back and build more intelligent leverage for the benefit of our common stock shareholders.
Yeah, speaking of common stock, of course, one of the big pieces of news is Kitty had talked about was your index inclusion and the NASDAQ one hundred and one. Big question is would you or are you selling newly issued stock to index trackers? Is equity something that you'd be looking to add to instead.
You know, when we execute THEATM, we just sell equity into the market. If we like the price and we like the terms, and if we think that the equity is undervalued, we don't, but we don't specify any particular buyer. I think that's just a parapursue to every other investor in the market.
So I want to get a little bit philosophical, because you know, we're talking now about Nasdaq one hundred inclusion and you're joining, of course, because MicroStrategy is nominally a software company. You founded it in nineteen eighty nine as a software company. Do you still consider MicroStrategy a software company.
Well, we have a very healthy software division now and we're very proud of it, and I did create it. But we also we think of ourself primarily as a bitcoin treasury company now, So our primary method of generating shareholder value is through our treasury operations. And if you think about there's three ways to create value for the shareholders. There's operating income, and our software business generates about seventy
five million dollars a year of operating income. There's also investment income that's been difficult to track, but right now we have eighteen point six billion dollars of unrealized investment income. People will start to get a better handle on that when we switch to fair value accounting next year, and then you'll actually see investment income captured in gap accounting. And then the third way to create shareholder value is
acquisition income. So when Apple buys back its own stock, or when Oracle m and A acquisitions, or when you do an LBO, you're basically taking capital which is cheap to buy a capital asset which is a higher return. So micro strategy is engaged in that capital acquisition process. We issue equity and debt, we buy bitcoin. That's resulted in about a fourteen point four billion dollar benefit if you value the bitcoin at one oh five for our shareholders this year, and so we do all three of those.
Obviously the big numbers, the investment income the acquisition income are more due to bitcoin treasury operations.
Well, I'm glad you bought up the accounting rules in particular for this reason because obviously Nasdaq one hundred wondering now with the rules around profitability for the S and P five hundred inclusion, does that accounting rule get you to the place where you think that the S and P five hundred comes next for you? And how soon do you think you can get there?
You know? I mean, obviously it's the decision to the S and P five hundred is above my pay grade,
so they will make that decision. But I'm optimistic in twenty twenty five, when we adopt fair value accounting, when we end up with fifty billion dollars of assets on our balance sheet under fair value of bitcoin goes up twenty percent a year, you're looking at ten billion dollars a year of investment income, So I expect we'll be generating billions of dollars a year or tens of billions of dollars a year of investment income, which becomes a
gap profitability. And I think that is the final thing people are looking for for inclusion in the S and P.
And that would certainly be a sign of the times if you did get included in the S and P five hundred. So we'll have to keep in touch on that one. But I want to go back to the bitcoin buying and I want to talk about how you actually purchase the bitcoin. Are you buying through an exchange over the counter, peer to peer? This, of course is made more interesting by the fact that obviously you're buying in bold.
We use regulated exchanges in the United States like coinbase, and when we're buying, we'll be buying on a simple like t WAP algorithm. So our goal is to not be noticed by the market, not to move the market. If anything happens with a bitcoin price, or even with the micro strategy price, it isn't us. Our objective is to basically be market participants, but never move it up or down or be noticed.
You know, it's interesting. I want to go back to something Katie was talking about before in definitions here are your software company or not? But when you think about the legacy software business and micro strategy, what role does it have, would you consider spinning it off?
No, we're very partial to it. We love the software business. I invented a lot of a large piece of it. We love our customers, we enjoy it, it's profitable, and it's a core part of the company's ident.
All right, Well, we're worth asking anyway. I am curious about you know, this unique treasury model that you have. Obviously you've had great success at MicroStrategy with having a bitcoin treasury. You recently pitched Microsoft though on investing in bitcoin. That was rejected. But are you surprised that you haven't seen more traditional companies follow your lead here and invest in bitcoin.
I think Microsoft's are the great companies in the world, so they don't really have a need to adopt a new idea. But in essence, Microsoft strategies are to buy their own stock back and to park short term cash and treasuries, and then to pay out dividends. That's very conventional. That's the finance playbook that would be taught at Harvard Business Goal, and if you're a successful company with a
great business, you tend to stick with that playbook. The playbook changed, really, it changed a few days ago when fair value accounting became mandatory. You know, we go into twenty twenty five, I expect you'll see I think you'll see the repeal of SAB one twenty one. I think you'll see fair value accounting. I think you'll see bitcoin embrace as a digital commodity by the regulators. We already
can see the political wins are very favorably shifted. Now, for the first time in one hundred years, large public companies have a capital asset that they can consider in lieu of treasury bills, and that's bitcoin. It doesn't make sense to consider real estate, or gold, or paintings or barrels of oil as a treasury asset. It does make
sense to consider bitcoin. So really, we're year one of a new era, and I would think that the companies that embrace it first are the ones that have a need to know or they're very close to the bitcoin industry. The digital assets industry, the Magnificent Seven. They'll embrace it later because they don't need it now, all.
Right, Michael, that's a good place to leave it. Always great to speak with you. That, of course, is Michael Sailor. He is MicroStrategy chairman and co founder.